Friday, August 27, 2004

The hired guns over at the Progress & Freedom Foundation think that the problem with telecom policy in these United States is that there is too much public input.

At least that's the way I read this latest trial balloon from P&FF's Randolph J. May. Mr. May believes that there are too many "cooks stirring the pot" at the FCC. His solution, make the commission directly responsible to the president.

What a neat trick!

As an agency directly responsible to the president, the FCC could invoke executive privilege to prevent the public from finding out whom the commissioners are meeting with in the course of shaping public policy.

Oh, I get it! Make telecommunications policy like energy policy! That is, make policy a captive of the corporations who constitute the industry and reduce public scrutiny of the decisions of the commission along with examination of the decision-making process.

Brilliant!

This is proposal is classic incumbent monopolist logic at work. One passage provides the key to understanding what Mr. May and his paymasters have in mind. He writes:

"In large part because of drawbacks tied to its institutional legacy, the FCC's implementation of the 1996 act has been problematic. In this quickly evolving digital age, the commission regularly issues muddled, fractious decisions that take many months, or years to produce and they are frequently overturned in court."

Before getting on to the argument itself, it must be noted that the companies that fund the Progress & Freedom Foundation (particularly the regional bell operating companies Verizon, Qwest, SBC, BellSouth and their predecessors) bear a hefty portion of responsibility for the FCC's inability to make timely policy. These companies employ armies of attorneys whose functions include filing suits to challenge FCC decisions in the various federal court districts across the country.

That apparently irrepressible impulse to litigate further strung out the FCC's long policy implementation process which is the impetus for Mr. May's suggestion.

Mr. May's complaint here is really that the current structure of the FCC provides companies other than incumbent phone and cable companies the opportunity to influence the regulatory process through which the FCC makes its rules. On top of that, there is no secrecy available in the process. The ex parte rule requires that commissioners and the commission staff publicize any meetings they have with parties having an interest in commision rules. The room can be filled with smoke as the industry lobbyists can blow, but the light of public scrutiny must be allowed to shine in.

What Mr. May and his P&FF masters want is something akin to the Cheney energy task force where the entire process of shaping policy can be conducted behind closed doors, outside the view of and beyond the influence of the public and those with views that run counter to those of industry incumbents.

P&FF is saying that democracy and transparency of process are the problem at the FCC. 'Things would be much better if we could get these rules right quicker,' they are saying. It's a tempting argument, unless one understands the importance of transparency in the regulatory process, as well as the nature of that process compared to that of executive departments.

The FCC is comprised of five commissioners. The prevailing rule is that the sitting president gets to name a majority (at least three) of the members, ensuring that the party not holding the White House gets at least two seats on the commission. In the years since passage of the Telecommunications Act of 1996, this split has had real world impacts.

Reid Hundt was the sitting FCC chairman when The Act became law. Under his leadership (with the support of the two other 'Democratic' members of the commission) rules providing Universal Service funding for schools, libraries and rural healthcare providers were passed. But, more importantly, the commission under Hundt and his successor William Kennard took The Act's commitment to creating a competitive telecommunications environment seriously.

With the change of administrations in 2000, Michael Powell became head of a commission which, for the most part, has been dominated by a 3-2 majority that has usually favored the interests of incumbents over a true competitive environment. In Mr. Powell's view, competition would exist among modalities (cable versus phone versus satellite) rather than within the modalities. Thus, under the Powell FCC, there has been a rollback in the commission's commitment to things like open access to incumbent networks.

One reason converting the FCC to an executive agency is so attractive to the P&FF folks is that raw political influence is much pronounced in those departments as compared to a regulatory setting. In today's politics dominated by corporate contributors, under secretaries and other positions in departments (like the Department of Commerce mentioned in his article) have become the positions into which lobbyists for the industry or sector that such agencies allegedly regulate migrate. It is a revolving door environment in which political contributions don't talk, they scream.

Under the transition suggested by Mr. May and P&FF, someone from, say, Verizon or SBC or BellSouth or Comcast or Cox, would — upon the victory of the presidential candidate receiving their largesse — move into a position that is today held by an FCC staff member who might actually have an iota of understanding of the concept of the public interest.

It is this pesky concept of the public interest or, at the very least, interests that do not entirely coincide with those of the incumbent telecom and cable companies which is the target of Mr. May's 'reform.'

What the Progress & Freedom Foundation seeks through this proposal is to enable its prime funders (see the names listed in the previous paragraph) to grab firm control of the regulatory process and turn it into a farce.

This 'efficiency' would come at the expense of an open regulatory process that allows for public input and participation. This approach would give those with the deepest pockets the ability to capture control of the regulatory process and shut the door behind them.

The Progress & Freedom Foundation forgets that the pesky inefficiency which open regulatory processes impose are inseparable from the reason that our republican institutions are so widely admired around the world. There is a price to be paid for 'making the trains run on time.' Sometimes pretty good is a damned sight better than perfect. This is one of them.